Federal Reserve Chair Janet Yellen navigated the tricky job of managing expectations on Tuesday in her first public comments on interest rate policy in more than two months.
She wanted the world to know the Fed isn't ready yet to raise rates from record lows. The job market is still healing, and inflation is too low, she said. At the same time, Yellen signaled that the Fed is moving closer to a rate hike by sketching the steps the central bank would take when it deemed the time was right.
In delivering the Fed's semiannual economic report before the Senate Banking Committee, Yellen tried to balance the public's thirst for information on the Fed's future plans, while giving the central bank as much flexibility as possible to tweak monetary policy on its own terms.
The Fed has two mandates: maximum employment and price stability. The dilemma Yellen faces now is that the two measures are heading in opposite directions. [Read more...]